Cash rent prices for land go up with grain prices

Farmers aren’t the only ones benefiting from high grain prices, an Iowa State University Extension survey shows average cash rent prices have gone up too. Extension economist William Edwards conducted the survey. Williams says looking at each county, the average cash rent went from $137 an acre to $150 an acre, or an increase of 10 percent.

Williams says it’s easy to pinpoint the reason for the increase. "I don’t think there’s any question but what the price of corn and soybeans since last September, October have been a major factor in pushing cash rents higher," Williams says. He says yields have increased too, but the majority of the increase has to be attributed to increased grain prices. Williams says the variation in rents across the state was larger than normal, as agreements set by the September deadline for terminating or revising lease contracts didn’t see as much increase or stayed the same.

On the other hand, he says farms that changed hands or where landlords and tenants renegotiated after the grain prices went up, those rents were quite a bit higher. Williams says that gave them a two-tiered rental structure with the variation around the averages was quite a bit more than usual.

Williams says tenants should be able to absorb the increase in rent, although it’s not the only cost increase they face. He says crop costs, the cost of seed,fertilizer and fuel, is quite a bit higher this year. While that takes some of the edge off profits, Williams says the grain price still leave "considerable profit potential." Williams cautions the 10-percent increase cited in the survey is just an average, and landlords can’t expect to automatically raise their rents.

Williams says the rent depends on a lot of individual factors, such as the demand for corn and beans in individual communities. He says they encourage landlords to look at things like the corn suitability rating, and the yields in the last few years. Williams says the increase in rent prices will be good for communities where the land owners are still in the area. You can seen the complete report at the Ag Decision Make website .